SEC announces Notification to Possibly Harmed Investors of Schwab YieldPlus Fund and Schwab Total Bond Market Fund in SEC v Charles Schwab Investment Management, et al., (the "Action")

SAN FRANCISCO, May 9, 2012 /PRNewswire/ -- On January 11, 2011, the United States Securities and Exchange Commission (the "Commission") filed a settled action against Charles Schwab Investment Management ("CSIM"), Charles Schwab & Co. ("CS&Co."), and Schwab Investments in the District Court for the Northern District of California.  The settled complaint alleged that (1) CSIM and CS&Co. made material misstatements and omissions concerning the Schwab YieldPlus Fund ("YieldPlus"); (2) CSIM and CS&Co. had insufficient policies and procedures to prevent the misuse of material, nonpublic information; and (3) CSIM and Schwab Investments deviated from the Schwab Total Bond Market Fund ("Total Bond") and YieldPlus's concentration policy by investing more than 25% of each of the fund's assets in non-agency, mortgage-backed securities.

Without admitting or denying the Commission's allegations, CSIM and CS&Co. agreed to pay disgorgement, prejudgment interest, and penalties totaling $118,944,996.  $110,000,000 is available for distribution in the Action.

You may be eligible to receive a payment if you:

1) invested in the Schwab YieldPlus Fund, and

a. held shares as of February 28, 2006, and/or

b. purchased or acquired shares between March 1, 2006 and March 31, 2008, inclusive; and/or

2) invested in the Schwab Total Bond Market Fund, and

a. held shares as of September 29, 2006, and/or

b. purchased or acquired shares between September 30, 2006 and March 31, 2008, inclusive.

Distribution of the funds will occur in accordance with the Court-approved Distribution Plan. Under the Court-approved Distribution Plan, two separate Distribution Funds were established:  the Total Bond Disgorgement Fund (for eligible investors in Total Bond) and the YieldPlus Fair Fund (for eligible investors in YieldPlus).  The Court appointed Gilardi & Co. LLC as the Distribution Agent for both Distribution Funds.  The Distribution Agent will calculate investor losses pursuant to an approved allocation plan.  A copy of the plan can be found at http://www.schwabfairfund.com/casedocs.html.  Generally, investor losses will be calculated based on the number of shares owned and the holding period, and may be reduced by the amount(s) of any settlement, arbitration, or other payments related to YieldPlus and/or Total Bond, including amounts received from the Charles Schwab Corp. Securities Litigation Settlement Fund, the Schwab Client Advocacy Team, and FINRA arbitrations.  In addition, the amount of any distribution will be reduced on a dollar-for-dollar basis for YieldPlus investors who (1) were residents of the States of Connecticut and Illinois, and (2) received payments as a result of settlements with those states involving a portion of the $118,944,996 payments in this Action.  Current and former Schwab employees do not qualify for distributions under the Court-approved Distribution Plan.

If the aggregate amount of investor losses exceeds the total amount available for distribution in either or both Distribution Funds, payments will be made on a pro-rata basis and investors in the affected Distribution Fund(s) will receive less than their full losses.  In addition, investors will receive a Distribution Payment only if the payment meets a $25.00 minimum threshold, which means that a harmed investor will only receive a Distribution Payment if the payment amount equals or exceeds $25.00.

How to Participate:

CS&Co. and other brokers whose clients invested in the funds during the relevant periods provided the Distribution Agent with information about their customers' investments in YieldPlus and Total Bond.  Based on this information, certain investors were individually mailed Record of Fund Transaction Forms.  If you received a Record of Fund Transaction Form, please follow the instructions provided on the form. If you did not receive a Record of Fund Transaction Form and have Eligible Transactions, please contact the Distribution Agent via email or phone to request a Generic Proof of Claim Form.  All Generic Proof of Claim Forms must be submitted to the Distribution Agent at the following address and postmarked no later than June 29, 2012:

Schwab Fair Fund
c/o Gilardi & Co. LLC
P.O. Box 808003
Petaluma, CA 94975-8003

Questions:  visit www.SchwabFairFund.com
Call 1-877-348-5519 or email [email protected]

SOURCE U.S. Securities & Exchange Commission